Why Are FIIs and FPIs on a Selling Spree?

FLLS anf FPIs on selling price
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Indian equities worth 150.68 billion rupees were sold in just 15 days! These are the investments FPIs offloaded in just 15 days. But why are they selling their stake? Let’s dive deep into the story.

What’s Happening?

The selloff spree of Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs), which started in 2022, seems to be continuing in January 2023. 

From 1st January to 16th January 2023, FPIs have offloaded Indian equities worth 150.68 billion rupees ($1.85 billion); this is another heavy selling spree after the end of September 2022. 

According to India Today, FIIs and FPIs have sold off a whopping Rs 6,700 crore in investments from the financial sector. The second heavy selloff was seen in the IT sector worth Rs 3,457 crores, followed by Rs 2,825 crores selloff in oil and gas consumable fuels. 

On the other hand, metal seems to entice FIIs and FPIs as they have invested Rs 2,518 crore in the sector. The reason behind this metal buying spree is that as China has eased COVID-19 restrictions and the country is slowly reopening, the demand for metals might soon strike as they are the world’s largest metal consumers. 

However, Domestic Institutional Investors (DIIs) have been pumping capital into the Indian markets, which is good news.

But the question is, why are FIIs and FPIs offloading their stake?

Reason Behind The Selloff

In 2022, when China went under strict lockdown, India was seen as a good investment opportunity. However, the tables have turned. According to CNBC-TV18, the Indian market is experiencing capital outflow because China, Taiwan and Korea show cheaper and attractive valuations, and foreign investors are looking to take advantage of the opportunity.

Moreover, the concern over worsening global growth prospects is also another factor which may have triggered the selloff. 

Will FIIs Make a Comeback to the Indian Markets?

According to Zee Business, AK Prabhakar, Head of Research at IDBI Capital Markets, the Union Budget will be a crucial event for the markets. The outcome of the budget will have an impact on the markets. Moreover, the appreciation of the Indian rupee will give a lot of scope to investors in the Indian markets. 

That’s it for today. Don’t forget to share this article with your friends. 

*The sectors mentioned in the article are for information purposes only. This is not an investment advice. 

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